Hedge Funds to Get Their Day in Congress

The House Subcommittee on Capital Markets will schedule at least one hearing to understand how hedge funds affect financial markets and whether they should be regulated, Rep. Michael Oxley (R-OH), and Rep. Richard Baker (R-LA), announced yesterday.

Congress is concerned over the explosive growth of hedge funds to more than 7,000 with $600 million in assets today; their impact on the economy, particularly since they are not required to register with the SEC; and whether these are appropriate investments for investors. Once the domain of only the very wealthy, asset management companies have been opening hedge fund-of-funds with minimum balances of as low as $25,000 to appeal to middle-income investors, and it is this extended reach that has Congress concerned.

The hearing will look into whether regulatory steps are needed, Baker said.